In a stark reversal from the Biden administration, the Office of the Comptroller of the Currency (OCC) has issued a statement that chartered banks may hold crypto.
During the Biden years, the government took a distinctly hostile stance toward digital assets and innovation in general. Banks were discouraged from holding crypto in a joint statement issued by the OCC, the Board of Governors of the US Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) issued a joint statement cautioning banks on their activities that involve digital assets (crypto).
The statement cautioned about scams and frauds as well as legal uncertainties and questionable representations. Regulators walked up to the line telling banks that “issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.” If you were a federally chartered bank, you would take notice of this statement.
Yesterday, the OCC confirmed that certain bank activities related to paying crypto-asset network fees are permissible.
The OCC stated in an Interpretive Letter 1186:
“… that a national bank may pay network fees, sometimes referred to as “gas fees,” on blockchain networks to facilitate otherwise permissible activities and hold, as principal, amounts of crypto-assets on balance sheet necessary to pay network fees for which the bank anticipates a reasonably foreseeable need. The OCC also confirms that a national bank may hold amounts of crypto-assets as principal necessary for testing otherwise permissible crypto-asset-related platforms, whether internally developed or acquired from a third party.”
The digital asset ecosystem is evolving rapidly as the digitization of finance is inevitable. The prior administration’s approach to Fintech innovation and crypto in general may go down as one of the most myopic policies in financial services history.
The OCC also highlighted that a national bank must conduct these activities safely and soundly and in compliance with applicable law.